Contractor: UC Davis

Contract Number: A132-151

This report is in response to the Health and Safety Code, Section 39913, which requires an assessment of the economic impacts on the San Joaquin valley agricultural industry of ozone and acid deposition damage. Measuring the linkage between farmer profits and consumer prices and ozone in a formal manner requires several different types of research that are linked in a consistent manner. In this study, the dose response work was performed by Randall Mutters and Michael Guzy at the Statewide Air Pollution Research Center at the University of California, Riverside. The economic analysis which builds on the yield response analysis was performed by Richard Howitt at the Department of Agricultural Economics, University of California, Davis and is the main topic of this report. The analysis of ozone impacts on agricultural profits has to account for the shifts and adjustments in prices and production practices that accompany changes in the effective yield and profitability of certain crops in different areas. Currently, ozone response relationships have been established for thirteen of the 40 crops specified in the California Agriculture and Resources Model (CARM). In addition, for some regions, a reduction of ozone to 0.04 ppm or even 0.025 ppm would not greatly increase the yield. Given the profit incentive for farmers, it follows that ozone reduction would cause some changes in the crop proportions and optimal locations for growing crops. When faced with changes in the relative profitability of crops, farmers will also change their levels of productive inputs used to grow the crops. The resulting changes in quantities of crops offered for sale will change the price that consumers have to pay. The demand functions which model this response determine what proportion of the benefits from ozone reduction get passed on to the consumer.

For questions regarding this research project, including available data and progress status, contact:
Heather Choi
at (916) 322-3893